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VAT analysis with SAP Tax Compliance (in S/4HANA)

More and more companies are already using the SAP S/4HANA platform for their operational processes or are planning to do so. However, these projects often present themselves as exclusive IT initiatives in which the tax department is not sufficiently involved in the planning.

However, it is essential that the tax function is involved in the design of measures from the Tax Compliance Management System (TAX-CMS). The main reason for this is that the tax analyses used to identify errors in mass accounting are either technologically outdated or the digitization of tax line item analyses is being considered for the first time. In addition, the ever-increasing complexity of business transactions, the outsourcing of accounting functions to foreign shared service center units with language barriers or the ongoing internationalization of day-to-day business pose considerable challenges for tax departments.

The main focus of such a project is not on identifying and correcting individual human errors, but rather on recognizing and avoiding systemic errors that can have costly consequences in tax audits. In this context, SAP offers valuable tools in the S/4HANA platform that can provide great added value.

An imminent switch to S/4HANA is therefore a suitable time to replace outdated manual spot checks or Excel analyses and take a technological step towards Analysis 2.0 with the help of SAP Tax Compliance.

The advantages of the tool can be summarized as follows:

No external interface: All data is natively available in SAP, eliminating the need for external interfaces.
Time savings through machine learning: Efficient processing of results through the use of machine learning components.
User acceptance with SAP Fiori interface: Use of the familiar SAP Fiori interface promotes acceptance in the user community.
Cross-tax type checks: The platform enables cross-tax-type checks with integrated on-board tools.
Built-in workflow: Use of the existing workflow for error correction.
Audit trail: With the integrated audit trail, the requirements of the TAX ICS can be met.

Example of a typical project process

Expansion of data sources for more comprehensive checks
Traditionally, the previous validation checks were largely based on the FI data source. Thanks to the newly created option of connecting additional SAP data from the MM and SD modules as well as external systems, validation rules can now also cover more sophisticated risks. This opens up greater scope for comprehensive tax analyses.

Cross-industry check routine set
The cross-industry check routine set (check repository) from WTS forms a solid basis for covering essential tax risks. Our experts from the various WTS service lines work closely with the tax contacts in the company to develop an optimal set of check rules or to further develop existing sets.

Machine learning
WTS has relevant expertise in the area of machine learning components. The successful use of this feature is crucially dependent on the careful implementation of SAP Tax Compliance by the user.

Processing findings and troubleshooting
Once the checks have been set up, it is advisable to implement the processing of findings and error correction in SAP Tax Compliance in accordance with the ICS. The WTS project team defines the so-called activity split and designs a workflow along the existing process chain of the company analysis. The aim is to find a balance between the workload for carrying out the checks and the comprehensive coverage of tax risks.

Preparing future users through training
At the same time, all future users are prepared for the effective use of the tool through WTS training courses. The transfer of practical knowledge ensures the smooth integration of the tool into daily work processes.

Support during implementation
During implementation, we actively support the IT department or the external project partner in the development and implementation of the checks, both in the front end and in the back end. The WTS specialists take on typical tasks such as the integration of various data sources, the design of check routines in Hana Studio and the creation of tasks and user groups in the front end.

Our Service

Our team of experts acts as a partner during the implementation of SAP Tax Compliance and the adaptation of processes, both in the accounting and tax functions. The strategic advantage lies in the fact that our specialists understand both the requirements of IT and accounting as well as the technical requirements of the tax departments. They act as project managers and interfaces between the specialist departments.

Contact

Martin Keuschnik is a partner at WTS. Among other things, he advises companies on the design and implementation of VAT compliance solutions such as SAP Tax Compliance in S/4HANA.

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